Days on the lot is a lousy metric for evaluating used-vehicle operations, says used-car guru Dale Pollak. In some cases, a used-vehicle manager should wait for a customer who will pay what a vehicle is worth.
Those views may sound like heresy coming from one of the foremost proponents of pricing vehicles to market and turning inventory quickly.
But Pollak now says so-called age management — which he defines as “mark it up at first, then as days click off, lower the price” and eventually get rid of it at wholesale — is outdated.
As a measure of operational efficiency, days on the lot is as up to date as a sundial, he said.
Pollak is fine-tuning what he promises will be better metrics. He plans to share them with a limited audience in October followed by a rollout in January at the NADA Show. But he gave Automotive News a sneak peek.
Age on the lot is a crude measure of a vehicle’s investment quality — its ability to make a meaningful profit contribution. With today’s technology, it’s possible to evaluate investment quality the day a dealership acquires a vehicle.
“If you know on day one, are you better off dealing with it today or 59 days later?” Pollak asked.
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